Manufacturing in the New York region expanded in April at the slowest pace in five months, a sign the boost to the U.S. expansion from factories may be moderating.
The Federal Reserve Bank of New York’s general economic index unexpectedly decreased to 6.6 this month, less than the most pessimistic forecast in a Bloomberg News survey, from 20.2 in March. The median estimate in the survey of economists called for a drop to 18. Readings greater than zero signal expansion in the so-called Empire State Index, which covers New York, northern New Jersey and southern Connecticut.
Slower economies in Europe and China may restrain exports and limit orders to American factories, which have been the mainstay of the expansion. At the same time, an acceleration in motor vehicle sales in the first quarter remains a source of support.
“Manufacturing has done reasonably well as of late,” Jeremy Lawson, a senior U.S. economist at BNP Paribas in New York, said before the report. “We’ve seen solid but not spectacular growth, and we expect that continue.”
Estimates in the Bloomberg survey of 56 economists ranged from 10 to 22.
The Empire State gauge of new orders fell to 6.5 in April from 6.8, while the shipments measure slumped to 6.4 from 18.2 a month earlier.
The index of factory employment climbed to 19.3 in April from 13.6.
The Fed’s index of prices paid decreased to 45.8 in April from 50.6 a month earlier. A measure of the factory workweek fell to 6 from 18.5.
Factory executives in the New York Fed’s district were less optimistic about the future. The gauge measuring the outlook six months from now declined to 43.1 from 47.5.
Economists monitor the New York and Philadelphia Fed factory reports for clues about the Institute for Supply Management’s report on U.S. manufacturing. The Philadelphia Fed’s gauge, to be released April 19, was little changed at 12 after 12.5 in March, according to the median estimate in a Bloomberg survey. The national ISM factory data will be released on May 2.
The Fed last week said the economy grew in all 12 of its regions from mid-February through late March as manufacturing, hiring and retail sales showed signs of strength in the face of higher fuel prices.
Manufacturers mentioned gains in automotive and high- technology industries, the Fed said on April 11 in its Beige Book business survey, published two weeks before the Federal Open Market Committee meets to set monetary policy. The firms “expressed optimism about near-term growth prospects, but they are somewhat concerned about rising petroleum prices,” the Fed said in the report.
Manufacturing output makes up 12 percent of the U.S. economy and about 6 percent of the New York economy.
“We pretty much see growth in all global end markets,” Klaus Kleinfeld, chairman and chief executive officer of Alcoa Inc., said on an April 10 conference call. “North America has strengthened. We have increased our forecast by two percentage points to 7 percent to 12 percent for 2012.”
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